Florida hospitals that treat many uninsured patients will lose millions of dollars in funding meant to offset those costs, according to a proposal unveiled Monday by federal health officials who had anticipated that more Americans would have access to insurance under the Affordable Care Act, reducing the amount of uncompensated care delivered by hospitals.
In announcing the proposed cuts, federal health officials said they would not give preferential treatment, at least at first, to states that declined to expand Medicaid, such as Florida.
The Department of Health and Human Services currently sends about $11.6 billion a year to states to distribute to hospitals — such as the Jackson Health System in Miami — that treat large numbers of uninsured and Medicaid patients.
The healthcare law called for cuts in those payments under the assumption that many previously uninsured patients would enroll in insurance programs under the new healthcare law. Hospitals would no longer be treating so many uninsured patients, so the federal compensation would also drop.
Ed O’Dell, a Jackson spokesman, said Miami-Dade’s safety net hospital system for the poor and uninsured cannot afford a reduction in funding for indigent care.
“Jackson already provides more in uncompensated care than we receive in funding,” he said. “While that will always be a part of our mission, any potential cuts are cause for concern.”
Emma Sandoe, an HHS spokeswoman, explained the reasoning behind the cuts in a written statement to The Miami Herald.
“The federal government will pay 100 percent of the cost of the newly eligible Medicaid beneficiaries for the first three years and never less than 90 percent after that,” she said, “and because the law expands coverage for millions of Americans, at the same time, it reforms federal payments to states to help pay for uncompensated care for uninsured and low income populations.”
Florida’s Legislature this spring declined to accept $51 billion in federal funds over 10 years to expand Medicaid, which could have covered more than 1.1 million uninsured individuals in the state.
5 percent reduction
Under Monday’s proposal, Florida’s funding would be reduced by about 5 percent, from an estimated $212.9 million to about $202.8 million for the year ending October 2014. The cuts would increase the following year.
Florida’s Agency for Health Care Administration administers federal Medicaid funds, but agency officials could not be immediately reached Monday to explain how the cuts might be spread among the dozens of qualified hospitals in the state.
But to determine the state cuts, federal officials used formulas based on the amount that each state spends compensating hospitals that treat large numbers of uninsured patients; the number of “disproportionate share hospitals” in each state, and the number of uninsured and Medicaid individuals seeking treatment at designated hospitals in each state.
The formulas also impose larger percentage reductions on states that do not target their payments on hospitals with high levels of uncompensated care and high volumes of Medicaid inpatients.
HHS officials did not factor in a state’s decision on expanding Medicaid when making the cuts for the first two years, but the proposal indicates that federal officials will draft a new formula for determining cuts after the year ending October 2015 — when the cuts are expected to grow sharply.
Over the next decade, funding will be reduced by hundreds of millions of dollars per year, beginning with a scheduled $500 million nationwide reduction for the year ending October 2014, and $600 million in 2015. The cuts grow to $1.8 billion in 2017, $5 billion in 2018, and a high of $5.6 billion in 2019.
According to HHS data, AHCA reported payments to 67 Florida hospitals that qualified for the funds in 2008, the most recent year for which data are available. Among those hospitals was Jackson Memorial in Miami, which reported total uninsured uncompensated care costs of $182.9 million.
Jackson received $91.3 million in disproportionate-share payments in 2008, according to HHS data.
Mount Sinai Medical Center in Miami Beach reported total uninsured uncompensated care costs of about $8.8 million, and received disproportionate-share payments of $4.1 million.
In Broward, Memorial Regional Hospital in Hollywood reported total uninsured uncompensated care costs of $76.2 million, and received payments of $16.3 million. Broward Health Medical Center in Fort Lauderdale reported total uninsured uncompensated care costs of $71.9 million, and payments of $20.8 million.
The draft proposal unveiled Monday by HHS is in the public-comments stage, and will not be made final until after July, said federal health officials, who emphasized that the amount of the cuts in disproportionate-share hospital funding might change.
Those interested in submitting public comments on the draft proposal can go online to http://regulations.gov, and follow the “submit a comment” instructions.